The World Bank’s latest forecast sees the global economy set for the fastest recovery from a recession for more than eight decades. However, that is no consolation for poor nations at risk of falling further behind wealthy countries amid slow progress with the Covid-19 vaccine.
In its half-yearly outlook report, the multi-lateral institution said the world economy was forecast to grow at 5.6 per cent this year, in a sharp upgrade from previous estimates.
Despite the improved global outlook, it appears that the good news is mostly reserved for the developed world where rapid progress with the COVID-19 vaccine has enabled a faster return to relative normality, while the impact of pandemic is going to inflict long-lasting consequences on the developing world for longer with worsening divisions between rich and poor nations.
Effects of the pandemic
The bank’s forecast said about 90 per cent of rich nations were expected to regain their pre-pandemic levels of GDP per capita by 2022, compared with only about one-third of low-income countries. Among low-income economies, where vaccination has lagged, the effects of the pandemic have reversed poverty reduction gains.
Advanced economies are expected to grow at a much faster pace with the US growth at 6.8 per cent. In the emerging economy grouping, China is forecast to grow in excess of 8.5 per cent taking the average emerging market growth to six per cent.
Excluding China, the rebound in emerging group of countries is anticipated to be a more modest 4.4 per cent. Even so, gains in this group of economies — which includes India, South Africa, Bangladesh and Mexico — would not be sufficient to recover losses incurred in the 2020 recession, and that output in 2022 was expected to still be 4.1 per cent below pre-pandemic projections.
Per capita income in many emerging market and developing economies is also expected to remain below pre-pandemic levels, and losses are anticipated to worsen deprivations associated with health, education and living standards.
Rising food prices and accelerating aggregate inflation may also compound challenges associated with food insecurity in low-income countries.
Amid the perilous outlook for the low-income countries, the rich world needs to loosen their purse strings to support the most vulnerable nations with faster COVID-19 vaccinations while supporting livelihoods across these nations.